Exclusive: Small businesses will remain exempt from casual conversion reforms, confirms Tony Burke

Minister for Employment and Workplace Relations Tony Burke has confirmed small business exemptions to the casual conversion system will remain in place, after industry representatives shared concerns over a lack of clarity about the federal government’s latest proposed industrial relations reforms.

On Monday, Burke outlined plans to amend the casual conversion framework and update the legislative definition of casual work, saying the tweaks will underpin the next phase of Labor’s industrial relations reform agenda.

Under the current rules, employers are compelled to ask casual workers if they would like to convert to permanent employment if those workers have been on the job for more than 12 months, and have worked a stable, predictable pattern of hours for the past six months.

However, small businesses with 15 or fewer employees are exempt, meaning they do not have to proactively offer casual conversions.

Speaking to SmartCompany on Tuesday, Burke assured small businesses that exemption will continue.

“We have made clear that the existing system will be unchanged,” Burke said.

“It will simply have the new definition apply to it. That includes the existing exemption.”

“Show us what that loophole is”: COSBOA

Earlier, business groups highlighted the uncertainty over the precise shape of Labor’s plans, and voiced concern over the as-yet unknown ways small businesses could be swept up by the changes.

Matthew Addison, chair of the Council of Small Business Organisations of Australia (COSBOA), said he was unsure what problems the reforms are intended to fix.

“If there is a loophole, show us what that loophole is, and what is your targeted solution to fix it,” Addison told SmartCompany. 

Many casual workers enjoy the flexibility offered by variable working hours and appreciate the bonus 25% loading applied to wages, he said.

The rate of casual employees converting to permanent workers is hovering in the single digit percentages, Addison added, suggesting there is no massive tide of workers hoping to trade the benefits of casual work for permanent entitlements.

Business groups seek detail on new legal casual work definition

Beyond the updated casual conversion scheme, Labor also plans to update the legal definition of casual work.

It was only inserted into the Fair Work Act in 2021, amid high-profile court cases that pitted contractual terms against the lived reality of working relationships.

It currently states a casual worker is someone who “accepts an offer of employment which makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work.”

Labor has long contested that view, saying it provides a loophole allowing employers to rely on the letter of their employment contracts, even if the actual working patterns are closer to permanent working arrangements.

Speaking on Monday, Burke said he would not go through the “legalese” of the proposed new legal definition of casual work, but maintained it would reflect a pre-2021 interpretation of the rules.

“I tend to describe it as the, ‘what’s really going on’ test,” Burke said.

Regarding the definition of casual workers, Addison called on the federal government to share more information with the businesses it will affect.

“Can we articulate what is wrong with the current definition, based on those court cases, that the Minister is being quoted as saying he wants to turn back the watch prior to those court cases?” he said.

“Why is that the case? What is the problem?”

The prospect of another regulatory change has put some business figures on alert.

Tacking too many new regulations onto the casual conversion pathway could level an “unfair burden on small business owners”, said Amanda Rose, founder of advisory and mentorship group Small Business Women Australia.

Entrepreneurs are “already juggling the interests and needs of permanent and casual staff,” she said in a statement on Tuesday.

While Burke conceded only a small percentage of casual workers will likely put their hand up for permanent conversion, Price warned against measures that could put staff “in the funnel towards becoming permanent workers against their will”.

Labor, Opposition tussle over reforms

The proposed changes have also caught the attention of the federal opposition, which has critiqued a plan to overhaul legislation the Morrison government itself inserted into the Fair Work Act in 2021.

Taking to social media, Shadow Minister for Employment and Workplace Relations Michaelia Cash, who was instrumental in the 2021 legislation, said the tweaks would only sow confusion in the SME sector.

“The Albanese Labor Government is undermining Australians who choose to undertake casual work and is creating uncertainty for small and family businesses,” she said.

The Labor government itself has defended the proposed changes, which are expected to be tabled in Parliament later this year.

“It’s an overcooked scare campaign, to be honest,” Minister for Government Services Bill Shorten told the Today show on Tuesday morning.

“I think when people hear the detail of what is proposed, they will all take a deep breath.”